Perhaps the best outcome from the Chancellor’s budget announcement that the UK Treasury is to underwrite billions of pounds worth of mortgages has been the muted reaction to it.

In a budget which was distinctly underwhelming, the Chancellor must have hoped that his latest attempt to ‘get the banks lending more’ would be hailed in the same way that previous populist capitalist measures, such as the ‘Right to Buy’ scheme were.

Most economic decisions are empirical, and there are valid points to make on either side of any argument.

But the Chancellor’s plan has nothing to recommend it. It will do nothing to strengthen either the drivers of growth in the economy, nor the transmission mechanisms to get increased levels of capital into the marketplace, while increasing the level of risk in the economy, by increasing the proportion of capital employed which is reliant on house price levels rising.

The greatest virtue of the coalition’s economic policy to date has been its reluctance to chase easy options, choosing to tackle the systemic problems within UK PLC rather than simply deliver very high short term growth rates.

That’s why I’m disturbed by the Chancellor’s latest move on mortgages, which is an ill-conceived and mistimed grope for populism following a by-election disappointment, rather than part of a broader economic strategy.

The first problem with the plan is that it’s a supply side measure. As I have repeatedly written on this site, the problem at present in the UK is not simply with the supply of credit, it’s with the demand for credit. At a time when consumer confidence is low, and inflation is high due to previous supply side measures going awry, it’s a misdiagnosis of the country’s economic malaise to pronounce that the problem is banks not lending enough. So this measure quite simply won’t work.

Secondly, supply side measures take longer to have a tangible impact on the wider economy as they work through the system, from central bank, to commercial bank, to consumer. Demand side measures, such as actually building new houses, have a much more rapid impact, for better or worse. If Osborne wants to increase demand and live with the risks inherent within it, then he should do that, not embrace halfway house solutions.

The third problem is that by committing the government to guaranteeing loans against the value of family homes, the Chancellor is merely re-inflating the housing bubble, which put us into this mess in the first place. At a time when bank’s are rightly having stabilizers applied to their capital ratios, Osborne is freewheeling downhill.

The government needed to produce either a ‘shock and awe’ budget, or a ‘steady as she goes’ budget, what has emerged is a mess, a clumsy embrace of short-termism, with the best outcome being a can kicked further down the road, and the worst case scenario seeing market confidence decline for no appreciable benefit to the economy or society.

* David Thorpe is the Liberal Democrat Prospective Parliamentary Candidate for East Ham in the 2015 General Election

54 Comments

Why don’t people have money for deposits ? It’s not just about rising house prices. In the past, people could save for a deposit. Council Housing was great for this – people could rent and have enough income left over to put aside for a deposit. Now however, people likely to be on housing benefit in a buy-to-let property. If they get more income it disapperas in benefit clawback. On top of that many people will have debt from tuition fees. Bizarrely the Government announces this massive £120 billion ‘investment’, which isn’t. Danny Alexander refused to answer the question about what happens if house prices crash – but I’ll have a guess at the answer – the Government will be another £120 in debt. Now £120 billion could have built a lot of new coucnil houses. In fact, it would be cheaper for the Governemnt to buy hosues on the open marketa dn rent them out at low cost rent rather then pay extortionate housing benefit to private landlords. And I thought the conservatives claimed to look after tax-payers money.

This scheme will also encourage buyers to purchase newly built houses constructed by developers. Thousands of these are being built all over green field sites up and down the country at high prices that vary from £120,000 to half a million pounds. They are not all selling well. Few actually meet the needs of first time buyers. Almost none are offered to the homeless or those on waiting lists.
However this subsidy will boost sales because it is only for people buying new houses. This will unfairly discriminate against people who want to buy or sell older homes and enrich the developers. It will also encourage the building of more new homes on green field sites and discourage those who wish to bring disused housing and slums back into use. There are more than 30,000 of these in Wales alone. This is not a proper use of public funds.

This helps those with some capital already available. What about those with no capital available? Too many people own too many houses they do not live in. Too many people live in houses they do not own.

A Chancellor concerned to bring about a truly property owning democracy with “liberty, property and security for all” would take the first step to gradually introduce UK Universal Inheritance, with £1,000 for all UK-born UK citizens reaching the age of 25 during the 2013/2014 tax year. The amount could then be increased by £1,000 annually for 25 year olds over the next 10 years up to £10,000, which is less than 10% ovf the average wealth of every adult and child in the UK. Such an amount could and should be financed by a radical reform of Inheritance Tax with abolition of unlimited exemptions,

Such a UK Universal Inheritance would enable more people to build up deposits for home ownership, or would otherwise helpfully increase spending by the less well off in these hard times. .

UK Universal Inheritance is ridiculous, and is simply not going to happen. Pushing for it would make LibDems into a laughing stock – it’s just so obviously someone looking for some free money for themselves. If taxpayers are to give money away, most would prefer to give it directly to their own sons or daughters.

Osborne doesn’t seem to have much room to move. I read somewhere this morning that the government’s debt is projected in 2015vto be close to twice what I was when this government took office, and still growing. This particular measure has a chance of stimulating some activity, therefore some employment, and therefore bringing in some extra income tax and VAT.http://www.guardian.co.uk/commentisfree/2013/mar/24/george-osborne-plan-c-carney

increasing the supoply of capital with the aim of increasing the demand for housing is ciompletely stupid if the supply of housing does not also increase-the only impact is for prices to rise.

None of what I have said above is original or indisghtful-the government are setting up a britiosh equivalent of ‘fannie mae’ and freeddie mac in the US-and look how that ended…

also a deposit for a hosue is not a human right-there are other thyings for thwe government to spend moeny on…

a better approach would bve to buiold social hiousing for those on the waiting list….and infrastructure projects of other kinds to spark economi demand which wopuld give non social houysing teenats the confidence and incoem to buy a private hosue without state aid…

Who do you think is the someone looking for free money for themselves?!

Do you think nothing should be done about the ever increasing inequality of ownership in our country? Is it right that some inherit billions, often free of tax, while others inherit nothing. The market does not work for welfare when people start off so unequally.

Are you in favour of greater equality of opportunity?

Of course people would prefer to give money to their children. The same kinds of personal preferences apply to any tax. There are good reasons for starting all young adults off with a bit of capital, and so there are good reasons for taxing recipients of large amounts of gifted and inherited capital in order to bring that about.

I don’t give the change of mandate as much significance as some do, but I am open to persuasion. Rawnsley suggests the present mandate is already loose. If the change was vital, a competent government would surely make it happen now, not wait a year. Perhaps that, and the abstruse nature of the topic, plus a wish not to make it a subject of controversy, was why it wasn’t mentioned in NC’s letter.

I didn’t understand the Chancellor’s change for the date of a letter. What was that about?

@David Thorpe. Have you fully understood the Chancellor’s arrangement? When I heard the speech, I got the distinct impression that the deposit guarantee would only be for new builds. On the BBC News that evening, one plucky woman said she would now be able to use her £5000 savings as a deposit, instead of having to continue to pay rent while saving more. That sounds like a good thing to me.

@Richard Dean 25th Mar ’13 – 2:00pm
“This particular measure has a chance of stimulating some activity, therefore some employment, and therefore bringing in some extra income tax and VAT.”
There is currently no VAT on new build. Personally I see no reason why there shouldn’t be VAT @20% on new build since a new house is a luxury (so that will be £1m for the postage stamp piece of land and £100k plus VAT for the mansion built on it, plus stamp duty on the whole transaction.)

This would also remove an anomaly in the construction market where new build incurs no VAT but renovation etc does.

@Richard Dean 25th Mar ’13 – 5:01pm
“one plucky woman said she would now be able to use her £5000 savings as a deposit, instead of having to continue to pay rent while saving more.”

Yes this does sound good until you realise that a lot of people will be thinking the same thing. Hence many people who aren’t currently in the market will now be looking to enter the market with the obvious implication of driving up demand and hence prices.

If the writer of the leader’s letter actually knew what was going on he could have had the leader write, “We have given new instructions to the Bank of England to do more to support the Coalition’s economic policy and its determination to boost growth and employment through monetary policy.”

The new regime comes in straight away and may just help the present Governor get more votes at the next meeting of the MPC for extra stimulus. We shall see.

The policy being adopted relies very much on influencing expectations. It therefore requires a clear communications strategy to help construct those expectations. It is possible that the ‘letter’ will become a key part of that strategy.

@Roland
I feel that a McEnroe response is in order. If houses are built for people to buy, then people need to be willing to part with their money to buy them. That willingness is going to affect house prices no matter how the finance is provided!

Richard Dean
UK Universal Inheritance is ridiculous, and is simply not going to happen. Pushing for it would make LibDems into a laughing stock – it’s just so obviously someone looking for some free money for themselves. If taxpayers are to give money away, most would prefer to give it directly to their own sons or daughters.

The amount proposed is only what recently we were giving to large numbers of young people in subsidy for university tuition fees. If what you say is correct, wouldn’t our participation in abolition of this subsidy have been greeted by cheers from the populace who thereby were enabled to keep more of their wealth and do what they wanted with it?

Richard Dean
I feel that a McEnroe response is in order. If houses are built for people to buy, then people need to be willing to part with their money to buy them.

Yes, and they need to HAVE the money, as well. And they need to have MORE money than other people who are also willing to buy the houses and pay that amount. Otherwise those other people will put in that higher bid and so get the houses. So then what if those other people are buying them in order to let them out? They will let them out to those who wanted to buy them but couldn’t afford it. Or what if they wanted to buy them to have second homes? Or wanted to buy them for no particular reason except that they thought they could sell them for more in ten years time and that would raise more money than putting the cost in a savings account for ten years?

So what if as a result of this young people are living in cramped and crowded accommodation? So what if their children can’t study properly and grow up stunted in their development due to not having the space a growing child needs? So what if marriages break down and children grow up with all the consequences of that, due to the pressure caused by the high price of housing? According to you, Richard Dean all this doesn’t matter, because “I’m all right, Jack”.

I agree that my adjective “ridiculous” was over the top, and I apologize. But UK Universal Inheritance is really not going to happen. The state is not Daddy and Mommy, and UK taxpayers don’t part with their money that easily.

The woman who I quoted did say she had £5000 to put down on a deposit. Sure, she’s in comoetetion with others who have money too. That’s life. That’s reality. It’s been like that for ever and will be like that for ever. If we had to consider every what-if under the sun, no-one would ever get anything done, and we’d all be worse off.

I agree with your point, but just feel that given the existing shortage of new housing, encouraging more buyers into the market may well leave many disappointed.

Regarding “I got the distinct impression that the deposit guarantee would only be for new builds.” the devil is in the detail!
“Help to buy” consists of two schemes, the first is the “equity loan” (government provides a loan of up to 20% of property value) is only available on new build and will start in April 2013. The second is the “mortgage guarantee” which provides incentives for lenders to lend to people with small deposits. The second scheme can be used ofr both existing and new build, however this scheme will be available from January 2014. [Source: http://www.hm-treasury.gov.uk/10012.htm ]

“Rubbish. Almost no one buys a house in their early 20s, and increased tuition fees haven’t got further than that into the population.”

Oh dear, silly me.

http://www.guardian.co.uk/money/2011/sep/24/first-time-buyers-london-older
“The national average first-time buyer age of 29 has only risen by one year since 1983, despite Land Registry figures showing property prices in England and Wales rose by 161% between January 1995 and July 2011 alone. Halifax said a sharp rise in parental support to help people buy their first property had kept the average age down.”

I am sure the same thing was said in the past about paying for free State education and free medical care.

“The State is not Daddy and Mommy [sic] and UK tax payers don’t part with their money that easily.”

UK tax payers part with 20% every time they buy most necessities other than food. Why would they not part with 10% Capital Donor Tax on all the luxury spending of giving or bequeathing capital? Why would beneficiaries not part with between 0% and 40% progressive Unearned Capital Receipts Tax (or true Inheritance Tax) on the lifetime receipt of gifted and inherited capital, unearned by them, before they receive it? If donors want to avoid the higher rates of tax on those who benefit from their generosity, they would spread that generosity more widely. The more widely donors spread their remaining 90% the lower would be the tax rate paid by the beneficiaries on receipt.

In each new generation big estates need breaking up, ownership of businesses should be more widely spread and buy-to-let houses and second homes ought to be sold on the market, so that fewer houses are owned by people who do not live in them, and more are lived in full time by people who own them.

How else could we do justice to the far sighted Preamble to the Liberal Party Constitution calling, as it still does, for liberty, PROPERTY and security for all? Are you a Liberal ? Or do you think nothing should be done about the ever increasing inequality of ownership in our country? Is it right that some inherit billions, often free of tax, while others inherit nothing. The market does not work for welfare when people start off so unequally.

It is not only those under 25 who would approve of a gradually increasing UK Universal Inheritance at 25. Their parents would too. Who would not want to see their young adult children being given a bit of a start in life? As the amount increases over the years it will help many out of alienation, financial and social exclusion and young adult and young parent poverty. For others it will go towards repaying tuition fees and encourage building up deposits for home ownership.

Are you in favour of greater equality of opportunity in each new generation in the inherited ownership of capital from the past as well as in health and education?

“Rubbish. Almost no one buys a house in their early 20s, and increased tuition fees haven’t got further than that into the population.”

Think ahead, to a true Opportunity Society and Property Owning Democracy in which UK Universal Inheritance repays tuition fees for those who have been to university, helps many more to accumulate deposits for house purchase and in which the taxes that finance the universal inheritance force the sale of more buy-to-let houses and second homes!

To answer your question – No, apart from the fact that it was broadly adopted as Liberal Party policy in 2005.

It would be difficult to calculate the numbers. The gain/loss is not as simple as you suggest. The gain will include the long term stability of our country, instead of the potential instablity of ever increasing inequality of ownership of wealth. So it will eventually be a question of leadership by someone or other – or some political party or other – at some time of political difficulty or “ungovernability”, as in the 1970’s, for example. Are we anywhere near that point at present?

@ richard dean-its for new builds yes-but its garuanteeing the mortgage-not against the risk of building the house-so Im not saure the houses will be buiolt inn capacity equal to the deamdn generated by this scheme-thus increasing demand at a greater rate than supply-or not increasing demand at all-also this scheme covers people who are not first time buyers-and therefore will have equity alreday-and thus will be competeuing for the credit wqith first time buyers-agin the supply of housing may not exceed the demand for it…

@Richard Dean 26th Mar ’13 – 11:21am
“Have you asked any voters, Dane? Many who expect to gain will say yes. Many who expect to lose will say no. How many of which type are there?”

Richard, haven’t you learnt anything!
The (UK UI) scheme’s criteria will be drawn up so that the ‘majority’ of the population get to receive the benefit, with the ‘minority’ actually footing the bill – and if they decide to complain they will be chastised for being wealthy and depriving the disadvantaged etc. etc.

@Roland. I am an old and crusty individual. I see selfishness disguised as generosity in many places. I am uncomfortable in other people’s comfort zones. I simply don’t believe the population will fall for the con trick of UK UI.

David – You will have seen that the OBR has this morning told the Treasury Select Committee that it anticipates that the number of new builds that will result from these measures will be “very small” and that the primary effect will be “shown up in prices rather than in quantities” of housing.

This dovetails with widely circulating reports of wealthy property owners who are contacting estate agents and asking for advice on how they can use this scheme to reduce the deposit they need to purchase properties. As I noted when commenting this on an article by Bill Le Breton last week – this is less about stimulating house building than about giving another pump to the house price bubble and increasing the nominal value of housing.

It is a scandal that Liberal Democrats are supporting this Tory nonsense, and it will end very badly: Alistair Darling quite correctly characterised this as an inflationary measure that will be as toxic in its effects as the worst excesses of the US sub-prime debacle.

Apologies again Dane, I was reporting my feelings rather than any logic or fact. This is because I am a human being. And for that reason, I just don’t believe UK UI is either realistic or fair. Any time free money is available there’s a host of sharks wanting a bite. A liberal approach might be to avoid taking tax from people unless it is absolutely essential. Maybe you could make it a voluntary payments scheme? I’d certainly volunteer as a recipient.

All posts I make are automatically subject to moderation, which I find inconvenient because they therefore do not appear for a while while the moderator/censor is considering her or his position. Did you see the questions I asked you? Would it not be worth while answering them?

There are good reasons for UK Universal Inheritance and it would be practical and electorally popular, not to say populist, once people had been persualded to get their minds around to dumping the ludicrous inequalities of Dynastic Capitalism in favour of Democratic Capitalism in each new generation.

However, it would be no use your volunteering as a recipient, if your description of yourself is accurate!

I am not against a a Britiish equivalent of ‘fannie mae’ if the mistakes that were made in the US can be avoided. This basically means supporting stability in the mortgage market i.e. providing finance for long term (25 year) fixed rate mortgages and mortgage guarantees on good quality conforming capital repayment loans i.e. loans with historically conservative income to loan multiples and 80% loan to equity ratios with private sector mortgage guarantee insurance available for lower deposit levels.

The preliminary conditions for the introduction of such a government sponsored scheme in the UK would include a housing market that is not reliant on a critical shortage of housing supply, continuing restrictive planning conditions, quantative easing and near zero base rates to maintain property asset values.

Richard Dean
But UK Universal Inheritance is really not going to happen. The state is not Daddy and Mommy, and UK taxpayers don’t part with their money that easily.

I’ve always thought a fund to give everyone some sort of chance in life, paid as they enter adulthood and paid from a tax on inheritance to be eminently sensible. The idea of inheritance stems from the days when it would be young adults inheriting the money, but with today’s lifespans it’s more likely to be people in their 60s getting it.

It seems to me to be absurd that as a result the housing most suitable for bringing up families tends to be in the hands of those well past bringing up families, while those who are bringing up families are often doing so in cramped conditions, or doing a bad job at it due to having to spend so much time working to pay off the mortgage.

I fully appreciate there tends to be strong emotional resistance to the idea, so I’m not suggesting the Liberal Democrats should put it forward and expect it to be an immediate vote winner. However, it seems to me illogical that people will complain about their children being unable to get housing and so staying stuck living at home, feel sad that they are denied grandchildren because their children cannot get housing to start a family, and yet resist the idea of inheritance tax “because I want something to pass on to my children”.

The woman who I quoted did say she had £5000 to put down on a deposit. Sure, she’s in competition with others who have money too. That’s life. That’s reality. It’s been like that for ever and will be like that for ever.

Yes, and I’m pointing out that if people have more to bid when buying housing, the consequence is that house prices will rise. So if you give people extra money to buy houses, it doesn’t help them, instead by pushing house prices up it helps those who are trading down. This aspect of the free market seems to escape many Conservative politicians and commentators.

So, my feeling is that any sort of subsidy for house purchase needs to be targetted – seems to me targetting it at the young is a good idea, and needs to come from housing, acting as a disincentive for people to hold onto it just for investment and balancing the tendency for it t push house prices up.

Yes, I’m tired of selfish right-wing arguments which seem to care nothing about how society is deteriorating due to the rise in inequality, and I’m dreaming of a society where we do think all should start adult life with a chance of getting somewhere. Caracatus points out “a sharp rise in parental support to help people buy their first property”, which means those who don’t have access to inherited wealth will mostly NEVER get the chance to have a house of their own. You don’t seem to care about things like that, what you are saying here seems to me very much to be “I’m all right, Jack”.

the right to own a hosue is not a human right-and not the job of thwe state-across Europe and the US people rent ratehr than buy-sometimes all their lives-and the sky hasnt fallen in-if the government want to garauntee £120billion worth of somehting-i CAN THINK OF DOZENS OF FAR MORE IMPORTANT THINGS THAN ensuring people can buy a house-and secondly this plan will NOT increase the available capital to first time buyers in any way-as they will get the garuantee but so will a non first time buyer-the latter will have mroe equity so the bank will lend to them-
if this was a subsidy for first tiem buyers it would be ineffective and imoral-that its more likley to be a subsidy for buy to let landlords ios disgusting in the extreme

I can see the phrase “I’m alright Jack” being used whenever someone disagrees with a left winged policy. The problem is that in a world of global competition for limited resources, many “compassionate” policies often hurt the poor more than they help. So no more moral lectures from the left please; use reasoned argument instead.

Secondly, I think we are all in agreement that as a whole helping people buy second homes is an awful policy. I would also add that I believe many conservatives would agree with us, so the question is, how did it get through?

It may not be a human right to own the house you live in, but it is a very good thing for as many people as possible to do so, for all sorts of reasons.

What is, or ought to be, a human right in a democratic capitalist country is for all young adults to inherit, through the state, a basic minimum amount of capital, financed by reform of inheritance tax without unlimited exemptions. Then more will be able to own houses they live in, and fewer will own houses they do not live in.

I will indulge Richard Dean by making a brief comment. However I’ll succumb to one of his other pet hates by quoting an economist, this time Roger Bootle of Capital Economics, since he sums up the problems with rigging the housing market in this way more pithily than I would.

Reviewing the Budget in his Telegraph column, he wrote: ‘Then there were the measures to boost home ownership. This continues to be one of the worst features of postwar British policy. Housing is not the key to prosperity. And, however important it is, what is needed is a stimulus to supply, not increases to demand. We can no more get rich by buying and selling each other’s houses than by each agreeing to take in each other’s washing. Increasing the demand will only raise prices further.’

The other problem is moral hazard, though it’s fashionable to say we can worry about that once the housing market is frothing again…

“Inheritance is not a human right, that’s just a slap in the face to people who don’t even have access to clean drinking water. Same goes for home ownership.”

I said that what is, or OUGHT TO BE, a human right in a democratic capitalist country is for all young adults to inherit, through the state, a basic minimum amount of capital. The capitalist market does not work for welfare when people start off with vastly unequal amounts of inheritance of capital. What is more, an Asset Welfare State with universal inheritance at 25 would reduce the need for and cost of the Income Welfare State

There was a time when universal suffrage – votes for all – was not recognised as a human right in our country. It is now time for universal inheritance – inheritance for all – to be recognised as a human right in our country, and in due course in other democratic capitalist countries. Democracy has replaced feudalism. It is time for the Liberal political ideology of democratic capitalism to replace the conservative quasi-feudal political ideology of unfettered dynastic capitalism.

Of course clean drinking water is vitally important, but would you really abolish capitalist democracy in our country with the aim of bringing about clean drinking water throughout the world? I think not!

I did not say that home ownership ought to be a human right, but that it is a very good thing for all sorts of reasons. UK Universal Inheritance would help more people to own their own home, while ensuring that fewer would own second homes or houses they do not live in.

In a society in which merit is rewarded by advancement, inheritance of wealth need not make much of a difference. Ask Alan Sugar! By contrast, in a society in which everyone is forced to get an inheritance, the apparent rewarding of an absence of effort goes against the principle of rewarding effort.

Inheritance of culture and style is probably far more important. It comes from the family environment – whether supportive of school work, whether supportive of sport, whether stressed, whether loving. It also comes from the physical environment – whether clean, safe, healthy, inspiring, or not.

We already try to counter family-based and environment-based disadvantages to social mobility by providing schooling for all, sports facilities, policing services, apprenticeships, advice, counselling services, job opportunities that do not depend on who you know. These seem far more important than inheriting capital.

The other major problem about inheriting capital in this way is surely that it’s rather likely to be squandered? Parents who pass their wealth on to their children will have prepared those children in subtle ways to use the wealth well. Having the state give away money free seems like an invitation for sharks to tempt and party.

I always wonder about these proposals that propose some sort of income as of right funded by some sort of taxation!
I just wonder where people think money comes from!

Money is no more than a practical expression of the value of goods or services.A newcomer contributing to the supply of goods and services, (growth) is in fact creating a value which in my opinion should be recognised as ‘money': That however is not how our system recognises it. (?s/z?)

I want to change the system, not b****r around with one that is constantly failing!

the right to own a house is not a human right-and not the job of the state-across Europe and the US people rent rather than buy-sometimes all their lives-and the sky hasn’t fallen in

But I’m not saying it is. Indeed, elsewhere I have been very critical of the “right-to-buy” policy, this and my support for taxation on property has often led me to be accused of someone who is OPPOSED to the right to own a house.

I do believe it is a human right to have somewhere private to live of a standard compatible with the weather where it is and to have sufficient space to raise children if one wishes at an age when one still has the fertility to do it. I know some will not accept the bit about raising children, but I do see that as a natural part of being human and something which in almost all cultures across time has been accepted as a natural part of being a free human. Historically land ownership in this country implied also duties – in the feudal system the aristocracy owned the land but were supposed to have a duty to provide sufficient support for the peasantry for them to be housed and raise families. I believe that duty remains, largely delegated to the state, but it is also why I cannot accept land ownership to be absolute and free of any duties which may include taxation, in particular if ownership by some results in others being squeezed out of their human rights to housing.

I’m not saying that right necessarily includes owning housing. I think it is covered by there being sufficient state owned housing rented out at cost price to provide a minimum standard to all.

Richard Dean
In a society in which merit is rewarded by advancement, inheritance of wealth need not make much of a difference.

But it does. Our society is NOT one in which merit is rewarded by advancement. Sorry Richard, but when you say that, it’s all part of your “I’m all right, Jack” attitude. When people can slave and toil all their lives and yet never have enough to afford even the meanest of housing, where is the reward for merit?

Having access to inherited wealth makes a HUGE difference. It gives you the freedom to do other things, to make use of your skills and try out new ideas, without the constant fear of how you are going to pay the bills. If you look at our society now you find MOST people who are doing well were helped out by coming from a background where there was a bit of family money to push themselves forward.

Ask Alan Sugar!

Most people are not Alan Sugar. Alan Sugar is not an average sort of person. Whether he made his money through personal skill or through happening to be in the right place at the right time is debatable, I think a mixture of the two. However, even if it is entirely through personal skill, raising someone like this as the typical example we all could reach is ridiculous. It is rather like raising Usain Bolt as an example and saying we could all run like him if we only but tried.
By contrast, in a society in which everyone is forced to get an inheritance, the apparent rewarding of an absence of effort goes against the principle of rewarding effort

No, it doesn’t. No-one has suggested here that all rewards for effort should be taken away and put into this scheme. Indeed, the amount Dane Clouston suggested was very modest, as I said, less than the amount until recently we used to give to all young people who qualified for a university place. The suggestion here is that by giving this sum of money to all people at the start of their adult lives they are placed in a position to be better able to use their skills and advance by their own efforts because it gives them a platform to build on, perhaps by paying for more education and training, perhaps by giving them enough to start a business, perhaps to enable them to put a deposit on a house so in future they have the freedom that owning a house gives.

You, on the other hand, seem to think it is fine and dandy for people to be squeezed by poverty out of all chances of any decent life. Now I speak as someone who grew up in poverty, but helped very much by the fact that at least when I was a child we had a roof over our heads thanks to council housing. I don’t wish to boast, but I think I have a bit of a brain (not much of anything else that helps people get places) and I’ve used that to get places. Not everyone in that situation is like me. Some aren’t that intelligent. Some just aren’t going to make it as Alan Sugar or even something much more modest, however much they try. What about them? You don’t seem to care, you don’t seem to understand the point that our society is growing rapidly more unequal in wealth, which condemns many at the bottom to a lifetime of misery even if they are decent hard-working people. Oh no, since YOU are fine, and YOU have done well in life, in effect you say to them “Stuff you, I don’t care, I’m all right, Jack”.

Because we all live in a capitalist democracy in which we should have a basic minimum amount of capital for all (as in the beginning of each Monopoly game!) as well as votes for all, in each new generation. I propose, of course, a basic minimum rather than equality of inheritance for all, recognising the impracticality and undesirability of the latter.

UK Universal Inheritance is not envy speaking, just a determination that all should be helped as I and others have been and will be helped. £5,000 at 25 from a trust set up by my grandmother was, eight years later, in 1971, one third of the cost of, not just of the deposit for, of our first house. Of course inheritance makes a difference, however much merit is or is not rewarded!

Many other things are important, too, but that does not meant that inheritance of a nest egg at 25 would not be important to everyone.

The admirable demand for social mobility takes as given, however, the financial starting point. The point is to change that starting point, with greater equality of opportunity not only in health and education, but also in the inheritance of capital.

And yes, some of the gradually increasing UK Universal Inheritance would be squandered, although the person to decide that is the person who does the so-called squandering. In any case, more spending would be good in these hard times.

“Sharks”? To every solution there is a problem, if for some reason you don’t like the solution!

Richard Dean
The other major problem about inheriting capital in this way is surely that it’s rather likely to be squandered? Parents who pass their wealth on to their children will have prepared those children in subtle ways to use the wealth well.

Oh, come on. The gossip pages of the press are FULL of the children of the wealthy squandering away their money on drugs and fripperies. Given that I’ve just criticised you for raising the extreme example as if it’s typical, maybe it’s a little unfair of me to mention it, but here I am doing so: Hans Rausing …

I know Dane, I didn’t mean to be over critical. I think inheritance tax should be increased to 50% (or an accession tax adopted), I just don’t know whether universal inheritance would be the best use of that money. I’m not strongly against the idea.

Ever since the Accessions Tax was first proposed by Dick Taverne’s Insitute of Fiscal Studies – authors C T Sandford and another, I seem to remember – I have always thought that it should be IN ADDITION TO a tax on giving and bequeathing, currently called Inheritance Tax, rather than a replacement for it.

I propose a flat 10% Capital Donor Tax on all giving and bequeathing, without exemptions, except between partners, spouses and cohabiting siblings, in tandem with an Accessions Tax from 0% up to 40% for larger lifetime total receipts of capital gifts and inheritance. So some would effectively pay a total of 10% + 0% on amounts received. Others would eventually be taxed at a total of 10% +40% = 50% on total lifetime RECEIPTS above a certain amount. Inland Revenue could cross refer between the two taxes. So we more or less agree on the 50%!

I hope you might get used to, and indeed become enthusiastic about, the idea that the best use for such a tax on the receipt of unearned capital is to redistribute the ownership of capital by gradually introducing UK Universal Inheritance , in the interests of greater equality of opportunity for all. It cannot be right that some inherit billions while others inherit nothing.

Obviously very interested in this as a homebuyer but as of today still too earl yin the game to see if this is going to make life easier for anyone looking to buy. Wording is key on all the schemes, they are all worded very similarly which I feel will confuse some.
Also it needs to be pointed out these schemes won’t make owning a home ‘Cheaper’, but will hopefully make it ‘easier’!
I’m waiting for the big banks to step in and see where we go from there but anything that gives me a chance to own my own home is fine by me.

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